June 12, 2008

Did you know? The Consumer Price Index for April showed the highest food price inflation in 17 years.

There are a number of factors contributing to higher food prices including higher energy costs, growing global food demand and changing weather patterns. However, policies for subsidizing and mandating the conversion of corn to fuel are the only part of the food inflation equation that Congress controls.

Last year, food-to-fuel policies led to ¼ of U.S. corn being turned into ethanol. That number will rise to over 30% this year. By 2012 as much as 40% of our corn and 30% of our vegetable oils could be be diverted to fuel production.

This diversion of food crops is reducing the supply of food and feed and contributing to food price inflation. Today, food prices in the US are rising at twice the rate of inflation. Globally, food prices rose 83% in the last 3 years.

Congress and the Administration need to reduce our dependence on food as an energy source and to accelerate the development of alternative fuels that do not pit out energy needs against the needs of the hungry. That’s the mission of the Food Before Fuel Campaign – a partnership of more than 20 environmental, retail, hunger, Hispanic and food industry groups.

According to the Campaign’s statement of principles, the members will encourage policymakers to “revisit and restructure policies that have increased our reliance on food as an energy source, and to carefully address how to develop alternative fuels that do not pit our energy needs against affordable food and environmental sustainability.”

“Increased use of biofuels from corn and soy seemed like a good idea when Congress passed the Energy Independence and Security Act of 2007 as a way to lessen our dependence on foreign oil,” said Gus West, National Hispanic Institute president. “Dig deeper, however, and it becomes apparent that diverting our food crops into the development of ethanol is bad for the economy, bad for our vulnerable populations and bad for the environment. Congress needs to reconsider this flawed energy policy that sacrifices food for fuel — and damages our world in the bargain.”

Cal Dooley, CEO of the Grocery Manufacturers Association, noted that, “It is past time to acknowledge the reality of this problem and begin a serious, bipartisan effort to fix it. Our current policy is driving higher food prices around the globe and here at home, and while it’s not the only factor at play, it is one we can do something about. This effort is designed to show that voices from around the nation and across the political spectrum are speaking together to call for change.”

Participating organizations also stressed the close tie between expanded biofuels production and new environmental challenges. “The broad international concern and calls to revisit biofuels policies have been echoed by individual thinkers like Columbia Professor Jeffrey Sachs and Nobel Prize winning economist Amartya Sen, and organizations such as the World Bank and World Food Programme,” said Lester Brown, Earth Policy Institute president and co-founder. “Food-to-fuel policies led to expanded corn planting, which set off a cascade of changing land use at home and around the world that threatens crucial ecosystems. At the same time, global food price spikes are destabilizing nations and driving millions of people deeper into poverty. We cannot afford to ignore these impacts any longer.”

Richard Wiles, executive director of Environmental Working Group added, “America should be investing in clean energy sources like solar, wind and conservation, instead of federal mandates for biofuels that threaten to undo decades of progress in protecting the environment, and drive up the cost of food.”

Other groups expressed concern over the biofuel policy’s effect on high commodity prices, which in turn impact small businesses and livestock and poultry farmers. “Our members range from small family farms to businesses that are the cornerstones of local farm communities, and they are all feeling the impact of higher feed prices driven by food-to-fuel policies,” said Joel Brandenberger, president of the National Turkey Federation. “No one wants to see turkey farmers hurt, no one wants to see plant workers lose their jobs and no one should want to force Americans to make tough decisions about feeding their families due to higher food prices. This situation is not entirely out of our hands. We are doing all we can to control costs, but it is up to Congress to see through the ethanol industry’s PR and focus on what we can do to help American families.”

The National Chicken Council expressed similar sentiments. “More than one-third of this year’s corn crop will be turned into ethanol for motor fuel that is heavily subsidized by the federal government,” said George Watts, president of the National Chicken Council. “As a result, the price of corn that our companies use to feed chickens has skyrocketed, costing billions of dollars. The impact on industry has been severe. Congress should eliminate tax credits so that animal agriculture can compete on a more level playing field with corn-based ethanol producers.’’

Restaurant groups also joined in, voicing concern over the impact of food-to-fuel mandates on business. “America’s restaurants are facing a sluggish economy, high gas prices, and skyrocketing food prices – now regarded by many of our members as the number one threat to their businesses,” said Michelle Reinke, director of legislative affairs for the National Restaurant Association. “Food and beverage costs account for 33 cents of every dollar in restaurant sales. In an industry operating on slim margins, these drastic price increases are a real challenge.”

“NCCR and the chain restaurant industry support efforts to reduce our nation’s dependence on foreign sources of oil, and we believe renewable energy sources like biofuels hold great promise for the future,” said Scott Vinson, vice president of the National Council of Chain Restaurants. “However, it is now widely recognized that U.S. ethanol policy, including subsidies for domestic producers and high tariffs on imported ethanol made from more efficient sources, is having significant, unintended consequences for food prices in the U.S. and around the world. We believe Congress should examine these impacts and undertake appropriate remedial action. The prices of food ingredients that go into the meals served in restaurants have skyrocketed over the last year, and this comes at a time when the industry is already straining under the pressure of high energy prices and a slowing economy.”

“There is certainly an ongoing debate over the best way forward on biofuels,” said J. Patrick Boyle, president and CEO of the American Meat Institute. “Our obligation as a nation must be to find fact-based policy answers that take the science and the economics into account. American consumers, our domestic food industry, and the environment we share depend on our being able to reexamine our policies and find the sustainable answer.”

The full list of organizations who have signed on to the Food Before Fuel Campaign are as follows: